Evidence That Bill Nordhaus Was Right About The Carbon Tax

Or at least, evidence consistent with Bill Nordhaus having been right about the carbon tax. That is, that the effect happens over the capital replacement cycle, not immediately as a change in behaviour. For we’ve the results so far of that carbon tax in British Columbia:

Using difference-in-differences and a novel break-detection approach I show that the introduction of a carbon tax has not ‘yet’ led to a significant reduction in aggregate CO2 emissions in British Columbia, Canada.

See More

Why Romer and Nordhaus For The Nobel

Sure, there’re a million people writing columns about this right now. But this seems an entirely reasonable overview of why. From The Conversation:

William Nordhaus and Paul Romer have been awarded the 2018 Sveriges Riksbank Prize in Economic Sciences (colloquially known as the economics Nobel). Both are macroeconomists dealing with long-run dynamics – big questions of what spurs economic growth, the importance of sustainable growth and how to tackle climate change.

The mainstream economic analysis of the 1970s, when Romer was a graduate student and Nordhaus was an assistant professor, was mostly dedicated to what’s known as general equilibrium analysis: if consumers were to maximise their utilities, and producers were to maximise their profits, what would happen?…

See More

With The Nordhaus Nobel Can We Finally Get Climate Change Economics Right Please?

William Nordhaus has finally got his Nobel which is good. What is also excellent about this is that we’ve now this official recognition of how to do climate change economics right. This is something that all economists know, of course, but something that near no one else – especially the policy makers – does.

Stick on a carbon tax at the social cost of carbon and we’re done.

Don’t try to plan or strategise through things, don’t insist that the money must be used to fight climate change nor compensate for it.…

See More